Tuesday, October 04, 2011

The CAFC laid out the contours of the law at issue in the PPC case heard at the ITC:

Section 337 makes unlawful the importation of arti- cles that infringe a valid and enforceable United States patent, but only if a domestic industry “relating to the articles protected by the patent . . . exists or is in the process of being established.” 19 U.S.C. § 1337(a)(2). The complainant can satisfy the domestic industry require- ment in one of three ways prescribed by 19 U.S.C. § 1337(a)(3), which provides:[A]n industry in the United States shall be con- sidered to exist if there is in the United States, with respect to the articles protected by the pat- ent, copyright, trademark, mask work, or design concerned—(A) significant investment in plant and equipment;(B) significant employment of labor or capi- tal; or(C) substantial investment in its exploitation, including engineering, re- search and development, or licensing.

Of interest

We agree with the Commission that expenditures on patent litigation do not automatically constitute evidence of the existence of an industry in the United States established by substantial investment in the exploitation of a patent. We therefore disagree with the dissent’s per se rule that “patent infringement litigation is an investment in the exploitation of a patent” within the meaning of section 337(a)(3)(C).

AND

PPC sought and received a permanent injunction in the Florida case, and that injunction remained in place for nearly two years until PPC licensed the ’539 design patent to Arris in 2004. As the Commission recognized, that delay suggests that PPC’s purpose in litigating was not to obtain a license but, rather, was to stop Arris from manufacturing infringing connectors.

Of inventor salary:

PPC also argues that the Commission should have credited at least a portion of the salary that PPC paid to the named inventor on the ’539 design patent as an investment in “engineering, research and development,” together with PPC’s investment in the equipment and facilities that the inventor used as he developed the patented design. Although the administrative law judge had credited the inventor’s salary as an investment in research and development in the initial decision, the Commission disagreed. The Commission noted that the evidence that PPC introduced as to its investment in research and development related generally to the ’509 application and the ’194 utility patent in addition to the ’539 design patent. The Commission found that PPC had presented no evidence of any investment in research and development that related specifically to the ’539 design patent, nor did it offer any allocation of its investment to that patent. In the absence of any such evidence, the Commission concluded that the most reasonable inference was that the resources that PPC invested in the inventor should be attributed nearly entirely to the “development of the structural and functional design of the connector embodied in the ’509 utility application and the ’194 utility patent,” rather than to the development of the ornamental design embodied in the ’539 design patent. Accordingly, the Commission concluded that any time and resources spent by PPC in researching or developing the ornamental design of the ’539 design patent were minimal and insufficient to constitute the “substantial” investment required by section 337(a)(3)(C).

Judge Reyna dissented in part -->

I join part II of the majority’s opinion finding that PPC has standing to seek a general exclusion order with respect to the ’539 patent. I respectfully dissent from the remainder of the majority opinion because I believe that additional fact-finding is needed to determine whether PPC’s research and development expenditures were a substantial investment in exploitation, and because the Commission erred in its interpretation and application of § 337(a)(3)(C) resulting in its wholesale rejection of litigation expenses—except in very limited circum- stances—for the purpose of meeting the “domestic industry” requirement in § 337 cases.

AND

The majority misapprehends the threshold domestic industry requirement through its perception that the ITC is “fundamentally a trade forum, not an intellectual property forum.” This view ignores the statutory role of the ITC and the legislative purpose of section 337, and tends to place an undue expectation of trade-related or production-related activity when analyzing the domestic industry requirement.

Text from Judge Newman in Hilton Davis appeared:

By permitting patent rights to be more effectively enforced at the border, Congress again advanced the axiom that enforce- able patent rights are good for innovation and for the economy. See Hilton Davis Chem. Co. v. Warner- Jenkinson Co., Inc., 62. F.3d 1512, 1529 n.1 (Fed. Cir. 1995) (Newman, J., dissenting) (“Technologic innovation has driven the American economy, over the past century, to the exclusion of virtually all other growth factors . . . . [P]atent-based innovation has a positive impact on the economic system as new industries and new goods displace the old.”)

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I'm a patent lawyer located in central New Jersey. I have a J.D. from the University of Chicago and a Ph.D. from Stanford University, where I studied graphite intercalation compounds at the Center for Materials Research. I worked at Exxon Corporate Research in areas ranging from engine deposits through coal and petroleum to fullerenes. An article that I wrote in The Trademark Reporter, 1994, 84, 379-407 on color trademarks was cited by Supreme Court in Qualitex v. Jacobson, 514 US 159 (1995) and the methodology was adopted
in the Capri case in N.D. Ill. An article that I wrote on DNA profiling was cited by the Colorado Supreme Court (Shreck case) and a Florida appellate court (Brim case). I was interviewed by NHK-TV about the Jan-Hendrik Schon affair. I am developing ipABC, an entity that combines rigorous IP analytics with study of business models, to optimize utilization of intellectual property. I can be reached at C8AsF5 at yahoo.com.